Investing in Holiday homes: Your 6-point checklist!

People looking to invest in second homes are often at crossroads on making the right purchase decision. There are a few pointers to remember before deciding.

Investing in Holiday homes: Your 6-point checklist!&nbsp

The present generation lives very busy, hectic and extremely urban lives, with life dictated by necessities of career, family, etc. Modern vacations tend to be hectic affairs often leaving one needing a break to recover! Unlike the previous generations where a retreat to the parental or grand parental home, often located in tranquil settings, provided regular impulsive getaways to bond with extended family and friends, the present generation does not enjoy similar luxuries. Parents and grandparents share the same bustle!

Perhaps it is this inner craving for respite from the fast pace of urban life that more and more of the upwardly mobile privileged are looking to invest into second homes, vacation homes, early retirement getaways and the like! Increasingly the opportunity to impulsively get away from the grind and chores of daily life to a place with friends or extended family or just oneself without the hassles of managing bookings and payments is catching the fancy of many a modern day professional. While the primary intent of such buys appears to be a personal indulgence, buyers also perceive such properties to be good stores of value and investments from a long term perspective.

Multitude of options to choose from

Until a few years ago, second home options were rather limited. They were either old family estates or in faraway exotic locations such as Goa. Most of these were stand-alone homes to be bought and rebuilt and rarely ready to move in. In recent years however, a number of options have cropped up. Small to large sized communities are being developed in exotic locations or, otherwise ordinary locations are being made exotic and appealing with large second home type projects. For instance, Lavasa, and the various golf community projects simmering in the outskirts of cities such as Bangalore. Also, while earlier such homes often tended to be massive mansions with high sticker prices catering to the ultra HNI or celebrity category, today more compact and maintainable options are also available, appealing to the self-made successful professional. Popular options range from individual seaside or hill side homes to larger premium gated community developments such as golf villa communities located in easy driving distance of cities such as Bangalore, Delhi and Ahmedabad.

Making the right decision

People looking to invest in second homes are often at crossroads on making the right purchase decision. There are a few pointers to remember before deciding.

Theme / Appeal-Second homes are essentially indulgent purchases. So it is important that the theme, nature of activity, nature of the community, etc are appealing to the owner and will make the time spent in this home a lot more enjoyable than the primary home. The home should appeal to one’s overall interest and should have enough to appeal and motivate the owner and his family to go there regularly. The kind of community also matters.

Accessibility - Accessibility to the property applies in the context of intended usage. If a person is looking to use it frequently, say maybe a few times a month, it should not be more than a 2 hour drive away. Anything more than that tends to become annual plan. If the usage is more an annual vacation or a retirement home, this may be a lesser consideration.

Commercial considerations - Practical considerations such as the size of investment, ongoing costs and potential for appreciation must also justify this purchase. But the parameters for evaluation are often different from those of city based homes. For example, being some distance away from the city is almost a prerequisite for a second home. Plot sizes may be irrelevant in a second home; e.g. you may not need large plot sizes on a golf course as you are surrounded by expanses of greenery that you don’t pay for.

Price, maintenance and other ongoing costs -The price of a second home can vary anywhere between Rs 20 - 30 lakhs and several crores. The determinants are location, density of homes per acre of land, the range of amenities and size of the dwelling. Maintenance costs are expected to be in line with city dwellings. Some rent payback and revenue sharing options may help offset this cost.

Streamlining the process -In India, very few real estate agents actually deal in second homes. As these are slower moving and unconventional properties, most city based mainline realtors do not have much information. Some premium upmarket agents may assist in the process. But web based research and word of mouth is the most common way of information dissemination. An ongoing trend is to create your own micro community or join a group of like-minded people who are looking for similar purchases.

Avoiding pitfalls -Second home locations are typically remote. Green field projects carry bigger than normal risks; therefore it is better to buy something at an advanced stage of completion. It is also important to consider the variety of amenities provided, which should satisfy the needs of all members of the family.

Often, people feel second homes should be larger than the primary homes. A rule here is to never fall into that trap. Second homes are more sparsely used and maintenance is a huge factor to be considered. Therefore, it would be wise to select a size based on the intended duration and nature of usage.

Investing in Holiday homes: Your 6-point checklist!Description:People looking to invest in second homes are often at crossroads on making the right purchase decision. There are a few pointers to remember before deciding.Times Now